CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

Wall Street continues slide by dropping 200 points

The US stock market declines for a second day.

Wall Street sign
Source: Bloomberg

Wall Street is still struggling in December. The US stock market is marking the second day of large losses. There has been a combined two-day decline of 1500 points.

Huawei and China affect US markets

There is still great uncertainty about the possibility of a US-China trade deal, which is driving investors to panic sell. Another factor that caused stocks to drop was US President Donald Trump’s tweets about threatening tariffs against China if an agreement couldn’t be made between the two countries. Trump’s promise on Twitter to become ‘Tariff Man’ has caused shares to tumble.

In addition to the those troubles, there was another issue between the US and China that is affecting Wall Street. There was the shocking arrest of Chinese tech company Huawei's chief financial officer (CFO), Meng Wanzhou. The detainment was made at the request of the US. She’s been charged with helping the corporation violate US sanctions against trade with Iran.

The US has long seen the telecommunications giant as a national security threat. It alleges that the Chinese government is using Huawei to illegally obtain US government secrets. China declines this claim and is demanding Wanzhou’s release. The tension between the nations could worsen and send stocks plummeting further if she serves serious jail time.

What’s next for US markets

Observers of the US markets are watching for many factors that may affect investors’ portfolios. Some financial analysts like, Mark Esposito, chief executive officer (CEO) of Esposito Securities, are pessimistic and fear that the worst may not be over.

‘There's concern that the trade deal is not as good as Trump said it was. Recession fears are also settling into the market,’ said Esposito.

Another financial expert, Delores Rubin, senior equities trader at Deutsche Bank Wealth Management, noted that the volatility of the markets can be influenced by news.

‘What this week and half shows is an extraordinary sensitivity to headlines; more so than usual. It's been very difficult to navigate,' said Rubin.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Find articles by writer